Ottawa's move to curb tax dodges in the real estate market is getting mixed reviews in Toronto and Vancouver, where high prices and speculation are causing the biggest concerns.

Tax professionals said the biggest impact of Finance Minister Bill Morneau's announcement Monday may be psychological, because when speculators hear the Canadian Finance Minister talking about tough tax measures they think twice about trying to skirt the rules.

"I expect this will start to put the brakes on people who think this is a free way to make money," Toronto accountant David Cramer said. "In theory, it will let people know that the [Canada Revenue Agency] is doing what it can to try to find ways to enforce the rules."

In B.C., the government said it welcomes the new measures.

"The changes announced by the federal government include measures we have asked for, and they are welcome steps that may help provide further fairness and stability in the market for home buyers," said Rich Coleman, B.C.'s minister responsible for housing.

According to several accountants, two of the announced changes could bring significant benefits, if they are strictly enforced. The first is a new rule requiring a home buyer to file taxes in Canada, as a resident, the same year they buy a home – in order to later claim the principal residence exemption on any gains for that year.

That could stop foreign investors from buying up properties while overseas, hoping to cash in later, by claiming they lived here all along.

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"It will clear up one of the biggest doubts about tax-free principal residence," said a Chinese-Canadian accountant from Vancouver, who has dozens of foreign clients. He spoke on the condition he would not be named, for fear of repercussions.

"More than half of the new homeowners I know were thinking as long as I live there at some point, at the end it can be tax free. I will live partly here, partly there, partly anywhere."

The most meaningful change, according to experts, is that every Canadian tax filer will now have to report the sale of a principal residence to the CRA. If most people abide by that new rule, experts said, the tax agency will – for the first time – have a handle on who is selling what properties and for how much.

Previously, people were supposed to fill out a form claiming a principal residence exemption, but they only had to keep that for their records, without filing it with their taxes.

"The new requirement to have anyone who is relying on the principal residence exemption to report the disposition on their tax return will give the government much better visibility on all the residential home dispositions," retired Toronto accountant Robert Toole said.

Mr. Toole and others suggested that could lead the CRA to look closely at family members who are buying and selling more than one multimillion dollar home, while claiming to earn little or no income. The agency can then conduct what's known as "lifestyle audits," targeting those cases.

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"I wouldn't be surprised if they start looking at these house sales and then look at other information missing on people's tax returns," Mr. Cramer said. "It's a start. And it shows the government is pretty serious about slowing these markets down for people who are trying to take advantage of the system."

On the downside, experts pointed out, one of the key ways foreign investors exploit the system remains. Students living in Canada temporarily can still buy a house, with money given to them, then claim it was their principal residence when they sell and share the gains with the rest of the family.

The Globe's investigation into questionable activity in the Vancouver real estate market discovered multiple cases where luxury homes were bought and sold in recent years by students.

"An uncle could still give the student $5-million and when the student sells for $6-million they can still give the uncle $1-million for their kindness," said Vancouver immigration lawyer Richard Kurland.

Several experts stressed the key will be whether the CRA has the resources and expertise to fully enforce the new rules, in addition to existing ones that were already being abused.

"What the announcement does not address is the issue of non-resident home owners who are not properly reporting gains on the sale of real estate or filing Canadian tax returns at all," said Mr. Toole, who suggested Canada adopt some of the more effective enforcement tactics used by the Internal Revenue Service in the United States.

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B.C. New Democrat housing critic David Eby predicted a crackdown on the abuse of principal residence exemptions will do more to make housing affordable than the 15-per-cent levy on foreign buyers the province brought in this summer.

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